Opinion

Meeting the Challenges of New Sea-Changes in Outsourcing: Tips to Overhaul Your Outsourcing Governance Program  

Automation is changing the face of outsourcing. Demand for low-skilled jobs in offshore BPO companies is declining, while demand for higher skilled workers that can manage and add value to business functions is rapidly increasing. Today’s new wave of outsourcing opportunities entail the application of human decision-making and critical thinking for complex processes. These new positions require more sophisticated oversight for management, troubleshooting, and continuous improvement.

Outsourcing can support significant cost savings and improvements in productivity, however many companies experience higher costs and pain points. A survey by a leading consulting company found that of 250 enterprises interviewed, 50% suffered from value erosion in their outsourcing engagements.

In our work with Fortune 1000 companies, our analytics experts have identified four factors that can transform and optimize outsourcing arrangements to deliver greater value. Implementing these four measures can promote operational visibility, predictability, value and program appreciation overall.

 

  1. Align Your Teams Through Co-Management

Organizations have typically performed outsourcing governance in silos – often with teams that are understaffed, undertrained, and lack the tools to collaborate and manage engagements effectively. This fragmented and archaic approach results in loss of value for the program and personnel, as individuals aren’t engaged or motivated to lock arms to support the greater purpose.

The intent of governance is to build a strong relationship and align strategies, goals and objectives through collaboration, mutual respect and continuous communication. By designing governance models with a joint relationship management structure, organizations can foster a cooperative, trusting working environment that encourages mutually beneficial decisions.

Consider the following when building out this structure:

  • Tier management structure with peer-to-peer alignment
  • Clearly define decision-making and authority rights; ensure each is understood by both the organization and its outsourcing partner
  • Secure commitment and sponsorship at senior levels
  • Recognize governance is successful only when both the buyer and provider are successful

Co-management creates a relationship where both parties have a vested interest in the direction and success of the program with transparency at both strategic and operational levels.

 

  1. Choose the Right Technology, and the Right People

To support co-management, enlist a sophisticated, proven technical tool that automates the outsourcing governance function. For best results, choose a solution that meets the following six requirements:

  • Ensures accurate and automated data is captured to gain visibility into outsourced team operations
  • Captures data that is highly accurate and can be used to create benchmarks, SLAs, and metrics to run governance
  • Creates a data-driven engagement and governance model
  • Ensures there is real-time visibility into activities to predict the outcome/deliverables
  • Links data captured back to current metrics and SLA in contracts
  • Frees up governance team resources to focus on increasing value from its outsourcing engagements

The right technology and executive guidance with the right skill set and appropriate authority must be in place to guide efforts. A common misstep is simply assigning outsource management to the individual(s) who previously handled the program in-house. This is a mistake, because the required functions of outsourcing are distinctly different from an in-house service model.

Outsourcing governance requires experienced, senior-level executives who can develop and maintain relationships with all stakeholders. Governance should be positioned high enough within the business to have the appropriate level of influence and authority to maintain strategy and operations alignment at all levels, and specifically between the two organizations.

 

  1. Commit to Being Proactive

Another mistake to sidestep is managing outsourcing governance programs in a reactive manner. According to a Deloitte 2016 Global Outsourcing Survey, 46% of companies found providers to be reactive rather than proactive in solving problems. Unmet business expectations erode relationship value among suppliers and clients. Management teams on the vendor side must proactively plan to ensure deliverables arrive on time and aligned with set quality levels and other requirements.

A practical way to support a proactive management approach is to leverage technology designed to deliver straight-forward, automated outsourcing governance support. This software helps forward-thinking organizations address ongoing challenges before they strike by:

  • Reducing workload – migrating overly manual processes to an automated system,
  • Supporting the creation of new SLAs and metrics that can auto-manage the engagement, and,
  • Empowering stakeholders with the right level of data to manage relationships and proactively predict outcomes.

 

  1. Promote Real-Time Visibility to Bolster Trust and Productivity

Technology that offers real-time visibility offers valuable insights. This supports solid working relationships from the start through a fair and data-driven approach to team performance and productivity. Information collected is accessed and shared immediately both internally and externally with various team members and stakeholders to drive continuous improvements.

Teams can leverage analytics to decipher how time is being spent by individual employees, groups or business units. Organizations can then identify unproductive pockets that may reflect underlying issues relating to manager oversight, team morale, slow or incomplete provision of information from customers, misunderstood requirements, etc. This data is useful in myriad ways, but at the most basic and foundational level, it can reveal how much time is being spent on core activities, since an extensive amount of time is often consumed in non-core or even unproductive work activities such as emails or meetings. Organizations using this information to reset the focus can enjoy productivity gains of 10-15% a day.

Focusing on these four simple measures will help organizations transform their outsourcing governance experience into a rewarding, productive program. Today’s new outsourcing models require new progressive management approaches. Leveraging technology to measure performance in an automated, real-time manner can help organizations achieve new-found improvement in collaboration and engagement, visibility and transparency, and productivity.

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